Benedict clearly enjoyed the crowds, taking a long victory lap around the square in an open-sided car and stopping to kiss and bless half a dozen children handed to him by his secretary.
In keeping with the historic moment, Benedict changed course and didn't produce his typical professorial Wednesday catechism lesson.
"To love the church means also to have the courage to take difficult, painful decisions, always keeping the good of the church in mind, not oneself," Benedict said to thundering applause.
He recalled that when he was elected pope on April 19, 2005, he questioned if God truly wanted it. "'It's a great burden that you've placed on my shoulders,'" he recalled telling God.
During eight years, he said "I have had moments of joy and light, but also moments that haven't been easy ... moments of turbulent seas and rough winds."
But he said he never felt alone and thanked his cardinals and colleagues for their guidance and for "understanding and respecting this important decision."
With chants of "Benedetto!" erupting every so often, the mood was far more buoyant than during the pope's final Sunday blessing. It recalled the jubilant turnouts that often accompanied him at World Youth Days and events involving his predecessor, Pope John Paul II.
Benedict has said he decided to retire after realizing that, at 85, he simply didn't have the "strength of mind or body" to carry on. He will meet Thursday morning with cardinals for a final time, then fly by helicopter to the papal residence at Castel Gandolfo south of Rome.
There, at 8 p.m., the doors of the palazzo will close and the Swiss Guards in attendance will go off duty, their service protecting the head of the Catholic Church over - for now.
He said he had accepted the position at the top of the Church as "a heavy burden on my shoulders," but said if God was "asking me to do this, I will accept because I am sure you will guide me." He said he was resigning, almost eight years later, for the good of the Church, not of himself.
Benedict addressed the crowd in several languages, but in English, he told the masses, "the decision I have made after much prayer, it's the root of a serene trust in God's will and the deep love of Christ's Church."
"I will continue to accompany the Church with my prayers and I ask each of you to pray for me and the new Pope," said the retiring Bishop of Rome.
Many Catholic Americans made the trip to be at St. Peter's on Wednesday, to bid farewell. They were among the masses as Benedict's Popemobile slowly wound through the crowd on its way to the alter. He stopped only to bless and kiss several young children from the crowd before mounting the stage, briefly greeting the audience and then taking his seat before the full papal address. Clerics read greetings and prayers in a variety of languages as Benedict looked on, waiting to utter his last words to the Catholic world as pope.
Even before the pontiff arrived, chants of "Benedetto" erupted every so often, and the mood was far more buoyant than during Benedict's final Sunday blessing and recalled the jubilant turnouts that often accompanied Benedict at World Youth Days and events involving Pope John Paul II.
St. Peter's was overflowing with pilgrims and curiosity-seekers who had picked spots along the main boulevard nearby to watch the event on giant TV screens. Ciro Benedettini, of the Vatican press office, told CBS News that about 150,000 had filled the square.
On Thursday, Benedict is to become the first pontiff in 600 years to resign his position at the top of the Roman Catholic Church. He has chosen to be known in his retirement as Pope Emeritus, and he will move into a custom-fitted apartment on the Vatican compound where he's said he'll spend the rest of his life in prayer and contemplation -- out of the limelight.
As CBS News correspondent Allen Pizzey has reported, Benedict has seemed increasingly at ease with his transition into retirement, but he will leave in his wake a Vatican beset by scandal. His successor will have to figure out how to deal with deeply-rooted management problems at the top of the Church, infighting between various factions in its governing body, and the lingering effects of the child sex abuse scandal.
Given the challenges facing the Church, Pizzey says the world's cardinals want to begin the job of choosing a new pope as soon as possible, according to a well-placed Vatican source, and the newest guessing game in Vatican City is how soon the conclave will begin. By both law and tradition, the cardinals can't talk openly about it until one day after Benedict officially leaves office.
Faced with questions about overcoming the scandal and improving the church's image, U.S. Cardinal James Stafford told CBS News, "We build the image by accepting the reality that we're living in, and not being angry, and not being defensive."
How the scandals may affect the choice of a new pope will never be known, notes Pizzey. The penalty for anyone involved in the conclave who breaks the oath of secrecy, including technicians and even housekeepers, used to be decided by the new pope. But in one of his final acts, Benedict changed the penalty to excommunication.